FIIs throng India market, pump over $1 b. in March

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New Delhi: Foreign investors have turned optimistic on the Indian market and invested a whopping Rs. 5,200 crore (about $1.16 billion) so far this month in contrast to heavy outflows witnessed in February.

Till March 16, foreign institutional investors (FIIs) have invested Rs. 5,232.7 crore in equities and bonds, taking total net inflows in 2011 so far to Rs. 7,326.7 crore, as per the data available with the Securities and Exchange Board of India (SEBI).

In February, FIIs pulled out a net Rs. 3,269.80 crore from the domestic market. In dollar terms, net FII outflows stood at $721.33 million. According to analysts, FII flows gushed after getting positive cues from the 2011-12 Budget.

However, at global level, uncertainty prevails on account of factors like the crisis in Middle East and North Africa region (MENA). Hardening of global commodity prices along with high crude prices is deterring foreign investors from putting money into emerging markets.

Overseas investors have been gross buyers of equities worth Rs. 2,354.1 crore so far this month and infused Rs. 2,878.6 crore in the debt market, taking their net investment in March to Rs. 5,232.70 crore.

While indicating that positive impact of the Budget 2011-12 is responsible for resurgent foreign inflows, market analysts further predict that foreign fund houses will keep investing in Indian bourses in the coming days too. “The FII inflows in March have been strong.

This may be because of the better-than-expected Budget,” said SMC Capitals head of research, Jaganna-than Thunuguntla.

In January, overseas investors were gross buyers of equities worth Rs. 79,420 crore, but sold shares worth Rs. 72,910 crore, translating into a net investment of Rs. 6,509.6 crore, as per the SEBI data. FIIs have been the gross sellers of equities worth  Rs. 7,044.4 crore in 2011 so far, but they were bullish on the debt market, with an investment of  Rs. 14,371.1 crore, taking the net investment to Rs. 7,326.7 crore.

In dollar terms, net FII inflows amount to about $1.63 billion in 2011 so far. In 2010, foreign investors bought stocks and bonds valued at nearly Rs. 10 lakh crore, a record number in a year.

At the same time, FIIs sold shares and bonds worth Rs. 7.8 lakh crore during the year — which implied a record net investment of over Rs. 1.75 lakh crore for the year. In dollar terms, net FII inflows stood at about $39 billion in 2010.

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